Today's Must Read
Strong Opdivo Fuels Bristol-Myers (BMY) Amid Competition
Wealth Management Aids Morgan Stanley (MS), Fee Income a Woe
Tuesday, October 22, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including U.S. Bancorp (USB), Bristol-Myers Squibb (BMY) and Morgan Stanley (MS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
U.S. Bancorp’s shares have outperformed the Zacks Major Banks industry year to date (22.6% vs. 21.9%). The Zacks analyst believes that U.S. Bancorp’s solid business model, core franchise and diverse revenue streams are expected to continue supporting its performance.
The company possesses an impressive earnings surprise history, having beaten the Zacks Consensus Estimate in three of the trailing four quarters. Third-quarter results benefited from higher revenues and loan growth. Further, rising loans and deposit balances have strengthened the company's balance sheet, enabling it to undertake strategic acquisitions.
Moreover, improved credit quality is a tailwind for the company. However, escalating costs due to its ongoing investments in technology and the likely increase in legal expenses remain concerns. Also, significant exposure to commercial loans remains a headwind for the company.
Shares of Bristol-Myers have gained 16.6% in the past six months against the Zacks Large Cap Pharmaceuticals industry’s rise of 2.4%. The Zacks analyst believes that Bristol-Myers’ lead immuno-oncology drug, Opdivo, continues to drive growth. Label expansion of the drug into additional indications should boost the top line. Empliciti and Sprycel are also performing well on label expansions.
Moreover, Bristol-Myers also has presence in other core therapeutic areas, including immunoscience and cardiovascular. Blood thinner drug, Eliquis, is also expected to drive growth. Meanwhile, the impending acquisition of Celgene will broaden the company’s oncology portfolio with the addition of Revlimid.
However, pipeline setbacks are a concern. The failure of the part 2 of the Checkmate-227 study was disappointing, given the potential in the NSCLC market. Earnings estimates are stable ahead of third-quarter results.
Morgan Stanley’s shares have lost 1% over the past three months against the Zacks Investment Banking industry’s decline of 5.9%. The Zacks analyst believes the acquisition of Solium Capital is in sync with the company’s efforts to further strengthen its wealth management business.
The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Its third-quarter 2019 results show improvement in trading and investment banking operations.
Its focus on corporate lending business, steady loan growth and strong balance sheet will continue to aid profitability. However, weaknesses in investment banking and trading are expected to hinder fee income growth and the top line. Also, given the expectation of more rate cuts and a tough operating backdrop, the company’s performance is expected to remain sluggish in the near term.
Other noteworthy reports we are featuring today include TOTAL (TOT), Bank of America (BAC) and Gilead Sciences (GILD).
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Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>